The UK property investment market is constantly evolving, and one of the most notable trends in recent years is the rise in popularity of the limited company buy-to-let (BTL) mortgage. If you’re a landlord, property investor, or considering becoming one, understanding what a limited company buy-to-let mortgage is, how it differs from a standard BTL mortgage, and how it could benefit your property portfolio is crucial. In this blog, we’ll break down everything you need to know about limited company buy-to-let mortgages, the key differences from personal BTL mortgages, and how working with a mortgage advisor can streamline the entire process.
What is a Limited Company Buy-to-Let Mortgage?
A limited company buy-to-let mortgage is a type of mortgage designed for landlords who purchase property through a limited company, rather than in their personal name. These limited companies are often set up as Special Purpose Vehicles (SPVs) that exist solely to manage property investments. Unlike traditional buy-to-let mortgages taken out by individuals, a limited company BTL mortgage is registered in the name of the company, with the directors and shareholders listed as applicants.
What’s the Difference Between a Regular Buy-to-Let and a Limited Company Buy-to-Let?
While both types of mortgages allow you to purchase property for the purpose of renting it out, there are several key differences between standard buy-to-let mortgages and limited company BTL mortgages:
1. Ownership Structure
- Standard BTL: Property is owned personally.
- LTD Company BTL: Property is owned by the limited company.
2. Tax Efficiency
- Standard BTL: Mortgage interest tax relief was restricted by Section 24 of the Finance Act 2015.
- LTD Company BTL: Mortgage interest is treated as a business expense, allowing full relief against profits.
3. Mortgage Rates
- Standard BTL: Typically lower interest rates.
- LTD Company BTL: May come with slightly higher interest rates and fees, but the tax savings can outweigh this.
4. Administrative Complexity
- Standard BTL: Easier to manage, fewer legal obligations.
- LTD Company BTL: Requires setting up and maintaining a company, filing accounts, and possibly incurring additional legal and accountancy costs.
5. Portfolio Management
- Standard BTL: Harder to scale due to personal tax implications.
- LTD Company BTL: Easier to build a portfolio without increasing personal tax liability.
Why Choose a LTD Company Buy-to-Let Mortgage?
There are several reasons why investors are increasingly turning to limited company BTL mortgages:
Tax Advantages
Setting up a limited company for buy-to-let property allows landlords to claim mortgage interest as a business expense, potentially reducing the overall tax bill. Corporation Tax is often lower than higher-rate personal Income Tax, which can benefit higher-earning landlords significantly.
Easier Portfolio Expansion
By purchasing properties through a limited company, you can retain profits within the company, reinvesting them into new properties without drawing income personally, and therefore avoiding income tax.
Estate Planning
A limited company can provide more flexibility in estate planning, enabling property assets to be passed on to heirs in a more tax-efficient manner.
Professionalism
Operating through a limited company projects a more professional image, which can improve relationships with lenders and business partners.
How to Get a Limited Company Buy-to-Let Mortgage
Obtaining a limited company BTL mortgage may seem complex, but with the right support, it doesn’t have to be.
1. Set Up a Limited Company (SPV)
Your company should be registered with Companies House, ideally as a Special Purpose Vehicle (SPV). This makes it easier for lenders to assess your business and intentions.
2. Speak to a Specialist Mortgage Advisor
Not all mortgage lenders offer limited company BTL products, and requirements can vary widely. Working with a specialist mortgage advisor, such as the team at Oportfolio Mortgages, ensures you get access to the most suitable deals and expert guidance throughout the process.
3. Prepare Your Documentation
Be ready with your company registration documents, business plan (if required), and personal financial records. Most lenders will want to assess both the company and the directors/shareholders.
4. Choose the Right Mortgage Product
Your advisor will help you choose between fixed or variable rates, repayment or interest-only terms, and identify a mortgage product that aligns with your investment goals.
Limited Company Buy-to-Let Criteria Updates from Coventry Building Society
In response to growing demand from landlords, Coventry Building Society has enhanced its limited company buy-to-let offerings. Here are the latest highlights:
Key Benefits:
- Up to four shareholders and/or directors
- Up to seven mortgaged BTL properties with Coventry, and 15 in total per client
- No minimum income required
Featured Products:
2-Year Fixed Limited Company BTL
Interest Rate: 5.36%
LTV: 75%
Fee: £1999
Fixed until: 31 October 2027
Early Repayment Charges (ERCs): Until 31 October 2027
Available for: Purchase
5-Year Fixed Limited Company BTL
Interest Rate: 5.59%
LTV: 75%
Fee: £0
Fixed until: 31 October 2030
ERCs: Until 31 October 2030
Available for: Remortgage
RMTS: Available
Expert Insight: Louis Mason, Marketing & Communications Director, Oportfolio Mortgages
“Limited company buy-to-let mortgages are a powerful tool for modern landlords. They provide significant tax efficiencies, scalability, and professionalism. At Oportfolio Mortgages, we specialise in helping clients navigate the complexities of these mortgages and ensure they are matched with the best possible lender and product for their situation.”
Is a Limited Company Buy-to-Let Right for You?
While limited company BTL mortgages offer many advantages, they aren’t the perfect fit for everyone. It’s vital to consider the following before making the move:
- Your current and future income tax rate
- Plans for expanding your property portfolio
- Long-term investment goals
- Willingness to take on additional administrative duties
The good news? You don’t need to make these decisions alone.
Get Expert Help From Oportfolio Mortgages
At Oportfolio Mortgages, our limited company buy-to-let mortgage specialists are here to guide you through every step of the process. Whether you’re purchasing your first property through a limited company or remortgaging an existing one, we’ll help you find the best solution to meet your goals.
Ready to take the next step?
Call us today and speak with one of our friendly advisors about your limited company buy-to-let mortgage options. Let us do the legwork so you can focus on growing your property portfolio.
